Seeking Gen Y as Credit Unions Invest in Members of the Future: Online Only

Rob Cartwright, former Young & Free St. Louis spokester, hands it over to Jenn Cloud, his successor.

All credit unions know their futures depend on connecting with Gen Y, but it still seems they’re having a tough time doing so.

According to a recent Filene Research Institute report, “Credit Union Market Niches: Social and Demographic Opportunities,” challenges such as closed fields of membership, weak technology and even a misunderstanding of the term “credit union” stand in the way of nudging the average CU member age down from 47.

Some credit unions, however, are using creative marketing programs to build young membership and have been reporting positive results. The $668 million Vantage Credit Union of Bridgeton, Mo., for example, is making a splash with young consumers in the St. Louis area through its Gen Y outreach program, Young & Free.

Vantage CU’s Young & Free spokesperson, 25-year-old Jenn Cloud, acts as a liaison between the young St. Louis community and the credit union. She hosts events, makes appearances and posts blogs and videos to the Young & Free St. Louis website, all with the goal of promoting Vantage CU and the credit union movement to the 18 to 25 age bracket.

Cloud said she helps snag new young members by marketing Not Your Mama’s Account, Vantage CU’s flagship Gen Y product. Not Your Mama’s Account is a free checking account that promotes saving through its Swipe2Save feature, an automatic transfer activated by debit transactions, and allows mistakes with the Oops NSF Fee rebate, which allows account holders one penalty-free overdraft every six months.

“The goal is to get members in when they’re young and make sure they’re satisfied with the two most basic products – checking and savings accounts,” Cloud said. “Then, through continued education, we can be there when they’re ready for, say, a mortgage.”

Since beginning her position about six months ago, Cloud has raised awareness about Vantage’s products by hosting an ugly sweater Christmas party and a wine bar “tweet-up” for Twitter followers, just to name a few. The publicity has been positive: currently, 18- to 25-year-olds comprise 12.5% of Vantage CU’s membership and 37% of those members are Not Your Mama’s Account holders.

Cloud lists mobile banking access, social media participation and giveaway programs as three other vehicles for attracting Gen Y. Vantage CU is currently developing a mobile banking app and offers TweetMyMoney, which gives members limited mobile banking access via Twitter. It also has an active Facebook account and offers local merchant coupons to members.

She also pointed out that credit unions should keep in mind the needs of young folks in their geographical area. In St. Louis, for example, getting married and buying a home is common for 25-year-olds, which makes mortgages key products for local Gen Y-ers, she said.

The Young & Free program is currently in place at 10 credit unions in eight states and two Canadian provinces and employs 10 full-time spokespeople.

Small credit unions, such as the $73 million San Diego Medical FCU, recognize the importance of attracting young members but may not have the resources to implement full-fledged Gen Y marketing programs. San Diego Medical FCU president/CEO Paul Lewis said his membership, comprised of medical field employees and servicemen and women, is aging.

“As a general rule, we need to attract younger members for our long-term success, so it’s a concern,” Lewis said. “The long-term success of any credit union is dependent on accessing young members and bringing them on as full members, so we recognize the importance of that.”

Lewis said his CU actively recruits young members at new hire orientation events in hospitals, where CU representatives share information about services such as mobile and text banking and direct deposit.

The CU’s two-year-old mobile and text banking services are at the top of Gen Y’s financial institution requirement list, but were implemented to satisfy members of all ages, Lewis said.

The credit union also markets its student loans and student packages, which include a credit card and checking account, to the younger demographic.

The two biggest challenges for small credit unions looking to attract young members, Lewis said, are a lack of resources and increasing competition.

Especially with rising compliance costs, excess time and funds are a luxury for small CUs, and potential members have many choices when it comes to selecting an institution, the San Diego Medical FCU CEO said.

“Telling our story in the face of all the competition out there is a major challenge,” Lewis said.

To take the first step toward overcoming the challenges of attracting Gen Y, credit unions might take a cue from Filene’s report, which lists the top right and wrong moves credit unions make in their quest to reach young consumers.

Filene recommends CUs recognize the value of their physical branches, focus on delivering their promises, emphasize their community involvement, allow young member involvement and develop and nurture a network for young employees.

The research organization also advises credit unions to avoid creating a disconnect between their marketing and products/services, producing unwieldy product or service offerings, overinvesting in branches at the expense of a strong online presence and assuming that by just talking to their young employees, they’ll successfully market to young consumers.

“I’m not overstating the case in saying that if you miss the young member, you will be out of business,” Rogers said. “It might take a few years, but it will be inevitable.”

Rogers added that the best way for a credit union to measure the profitability of a young member is to count the number of payment cards in his or her wallet.

“Debit, credit, prepaid – these are the best ways to link young adults to you and the best chance to remain in their consideration set when it’s time for a loan,” he said. “If you can get plastic into members’ wallets and then get them to use it regularly, you’re on the right track.”

Cloud concluded that while credit unions are headed in the right direction with the under 25 demographic, they still have plenty of work to do.

“Credit unions are out there fighting a good fight right now,” the St. Louis credit union marketer said. “But we know that people think it’s a hassle to switch institutions, and that the pain has to reach a certain caliber before they’re willing to make the switch. So we have to make sure we’re really out there pounding the pavement.”

Next Steps:

More on a Young & Free program in New Mexico.Credit unions sought for another Filene program aimed at young adults.

Here are a few more images from the St. Louis Young & Free Program.

Jenn Cloud and her entry in the ugly Christmas sweater contest.

Jenn Cloud, center, and fellow Young & Free spokesters from Alberta and Michigan dressed up as Lady Gaga for spoof music videos they were working on at the their annual conference.

This is LeKea, a Vantage Credit Union colleague, helping Jenn with a fashion show at the Grove Fest event in the fall.

Here's Jenn and the winners of the "Breaking Dawn" midnight premiere tickets from a contest she ran at the movie's St. Louis opening.

This shot was taken at the pumpkin carving contest at the Moonrise Hotel in St. Louis' University City where Jenn was a judge.

Here's some swag the spokesters get to keep as payment for their efforts.

And here's the Nissan Cube they tool around town in to promote their credit union and the Young & Free program.

And lastly, here's a collage that Jenn Cloud made for an interactive marketing conference, showing the integration of the Young & Free St. Louis all the way down to her nail polish.